Big Options Expiry Stirs Mixed Bitcoin and Ethereum Price Action

The crypto market has witnessed conflicting movements in the price of Bitcoin (BTC) and Ethereum (ETH) as a significant options expiry is anticipated to take place. 

Research Analyst Tom Dunleavy has highlighted that the event is set to take place tomorrow at 8:00 a.m. UTC. Dunleavy stated that the notional values of these expiring options are estimated to be approximately $2 billion for ETH and $5 billion for BTC, exceeding the value of the preceding quarter by $300 million.

Current Price Movement of BTC and ETH

Options expiry refers to the date on which derivative contracts, known as options, reach their maturity. These contracts grant traders the right, but not the obligation, to buy or sell the underlying asset, in this case, Bitcoin or Ethereum, at a predetermined price within a specified time frame. 

According to reports, the put/call ratio, which measures market sentiment, is 0.56 for Bitcoin and 0.57 for Ethereum, suggesting a bullish market outlook. Notably, when the put/call ratio falls within the range of 0.5 to 0.7, it generally indicates positive sentiment among traders. 

Furthermore, the max pain price, which represents the strike price that would result in maximum financial losses for option holders at expiration, is $26,500 for Bitcoin and $1,700 for Ethereum. At the time of this writing, Bitcoin is trading at $30,602.13, up 1.22% while Ethereum is up 0.26% to $1,856.19. 

These price surges shows investors are not worried on the impact of the options expiry incase of selloffs.

Significance of the Event

Depending on the actions taken, such as rolling options into more calls or purchasing puts, different dynamics may emerge in the market.

Dunleavy stated that if a significant portion of the expiring options is rolled into more calls, it could lead to spot buying from dealers. Dealers would need to hedge their books by purchasing the underlying assets, resulting in increased buying pressure on ETH and BTC. This scenario could potentially contribute to upward price movements.

On the other hand, if traders choose to purchase more puts, it may indicate more bearish sentiment. Whatever the outcome, investors are advised to take caution and use risk management measures to account for the increased volatility that is likely to accompany option expiration.